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Under pressure to jump start the Indian economy, the country’s ruling collation recently announced that it will open itself to more foreign investment, which will inevitably result in changes in India’s retail sector. Single–brand retailers like IKEA will now be allowed to open stores that they own 100% and multi-brand retailers like Walmart will be able to open as joint ventures, of which they can own 51%.
If this policy stands (and this is the second time this year its passage has been attempted), many are concerned that it will negatively impact the livelihoods of the country’s vast network of independent retailers and street hawkers. At the same time, others are pointing to the positive impact it will have on the development of infrastructure in rural areas, as that is where multi-brand retailers will be obligated to spend at least half of their minimum $100 million investment.
The other positive impact of this decision that the government has been touting is that 30% of the products sold in these stores must be sourced from small and mid-sized Indian business. This rule is meant to expand the supplier base in the country and also position these small businesses to become future exporters of their products. While local sourcing of products will certainly be a big step in creating a more sustainable supply chain, there is also a huge opportunity for these retailers to take a stand and demonstrate their commitment to sustainability through the actual design and sourcing of their stores. Some might say that asking retailers to go the extra yard in a place like India is completely out of the question. Fortunately in this case they’d be wrong, as PUMA has recently done exactly that in the Indian city of Bangalore.
On August 23rd, PUMA officially opened its first “sustainable PUMA store” that was both locally developed and sourced. It contains an array of interesting design features including the use of steel that has been recycled from DVD players, bicycles and tiffin boxes; it is 100% solar powered; it requires no air conditioning; and it utilizes super-efficient LED lighting. The store will feature a range of products made from organic cotton and a “Bring Me Back” program which will allow consumers to recycle footwear and apparel. While this store opening may be no huge surprise coming from the company that was the first to release an environmental P&L , it does send an important signal to other retailers that there is a real opportunity to do things differently as they think about scaling their operations in India. It will be interesting to see if others follow their lead.
